Comparison of Canadian and United States Rail Economic Regulations

Comparison of Canadian and United States Rail Economic Regulations

www.cpcs.ca FINAL REPORT Comparison of Canadian and United States Rail Economic Regulations Prepared for: The Railway Association of Canada Prepared by: CPCS CPCS Ref: 13381 January 20, 2015 FINAL REPORT | Comparison of Canadian and U.S. Rail Economic Regulations CPCS Ref: 13381 Table of Contents Acronyms / Abbreviations ............................................................................................................. 1 Executive Summary ....................................................................................................................... 2 1 Purpose of the Report .................................................................................................................. 2 2 Scope of Rail Economic Regulation .............................................................................................. 2 3 National Transportation Policy Statements ................................................................................. 3 4 Market Entry and Exit ................................................................................................................... 4 5 Level of Services ........................................................................................................................... 5 6 Pricing of Services ......................................................................................................................... 5 7 Competitive Access Provisions ..................................................................................................... 7 8 Mediation and Arbitration ........................................................................................................... 8 9 Cost of Capital and Revenue Adequacy ........................................................................................ 9 10 Conclusion .................................................................................................................................... 9 1 Introduction ............................................................................................................................. 14 1.1 Background ................................................................................................................................. 14 1.2 Purpose of this Report ................................................................................................................ 14 1.3 Structure of this Report .............................................................................................................. 15 2 Canada and US National Transportation Policy Statements ...................................................... 16 2.1 Introduction ................................................................................................................................ 17 2.2 Canada Transportation Policy Statement .................................................................................. 17 2.2.1 Canada Transportation Policy Statement ........................................................................ 17 2.2.2 Transportation Policy Statement Characteristics ............................................................ 18 2.2.3 Creation and Evolution of the Transportation Policy Statement .................................... 19 2.2.4 Role of the Policy Statement in Interpreting the CTA ..................................................... 20 2.3 United States Transportation Policy Statement ......................................................................... 21 2.3.1 United States Transportation Policy Statement .............................................................. 21 2.3.2 Adoption of the Transportation Policy Statement .......................................................... 23 2.3.3 Transportation Policy Statement Characteristics ............................................................ 23 2.3.4 Role of the Policy Statement in Interpreting 49 U.S.C. .................................................... 24 2.4 Summary and Key Findings ........................................................................................................ 27 FINAL REPORT | Comparison of Canadian and U.S. Rail Economic Regulations CPCS Ref: 13381 3 Market Entry and Exit ............................................................................................................... 29 3.1 Canada ........................................................................................................................................ 30 3.1.1 Certificate of Fitness ........................................................................................................ 30 3.1.2 Construction of a Railway Line ......................................................................................... 32 3.1.3 Running Rights ................................................................................................................. 32 3.1.4 Discontinuance ................................................................................................................. 33 3.2 United States .............................................................................................................................. 37 3.2.1 Certificate to Construct and Operate .............................................................................. 37 3.2.2 Exemption from the Need to Obtain a Certificate ........................................................... 38 3.2.3 Environmental Analysis .................................................................................................... 40 3.2.4 Abandonment and Discontinuance ................................................................................. 40 3.3 Summary and Key Findings ........................................................................................................ 43 4 Level of Services ....................................................................................................................... 46 4.1 Canada ........................................................................................................................................ 47 4.1.1 Accommodation for Traffic – Section 113 ....................................................................... 48 4.1.2 Facilities for Traffic – Section 114 .................................................................................... 57 4.1.3 Adequate and Suitable Accommodation – Section 115 .................................................. 60 4.1.4 Complaint and Investigation Concerning Company’s Obligations – Section 116 ............ 61 4.1.5 Arbitration on Level of Services ....................................................................................... 67 4.2 United States .............................................................................................................................. 67 4.2.1 Common Carrier Transportation, Service and Rates – 49 U.S.C. 11101 .......................... 68 4.2.2 Facilities for Interchange of Traffic – 49 U.S.C. 10742 ..................................................... 71 4.2.3 Switch Connections and Tracks – 49 U.S.C. 11103 .......................................................... 74 4.2.4 Car Service – 49 U.S.C. 11121 and 11122 ........................................................................ 74 4.2.5 Railroad Development – 49 U.S.C. 10907 ........................................................................ 76 4.2.6 Remedies .......................................................................................................................... 77 4.2.7 Statutory Limitations on the Jurisdiction of the Board .................................................... 79 4.3 Summary and Key Findings ........................................................................................................ 82 4.3.1 LOS Obligations of Canadian Federal Railway Companies .............................................. 82 4.3.2 Canadian Rail LOS Complaint Mechanism ....................................................................... 83 4.3.3 New CTA Amendments .................................................................................................... 84 4.3.4 LOS Obligations of U.S. Federal Rail Carriers ................................................................... 85 FINAL REPORT | Comparison of Canadian and U.S. Rail Economic Regulations CPCS Ref: 13381 4.3.5 Mechanisms for Resolving Rail Service Issues in the U.S................................................. 85 4.3.6 Exempt Commodities ....................................................................................................... 85 5 Pricing of Services ..................................................................................................................... 87 5.1 Canada ........................................................................................................................................ 88 5.1.1 Where Are Rates and Charges Set Out? .......................................................................... 88 5.1.2 Rates ................................................................................................................................. 91 5.1.3 The Notion of Reasonable Rate and Final Offer Arbitration............................................ 92 5.1.4 Revenue Cap for the Movement of Western Grain ......................................................... 94 5.1.5 Charges ........................................................................................................................... 100 5.2 United States

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